Among single-country exchange traded funds tracking developing economies, funds offering exposure to the Middle East and North African region often go overlooked by investors. One of those funds, the VanEck Vectors Egypt ETF (NYSE: EGPT) could be worth revisiting.

EGPT, the only ETF trading in the U.S. dedicated to Egyptian stocks, is up more than 3 percent this year and nearly 19 percent over the past 12 months. Still, investing in Egypt, North Africa's largest economy, is not for the faint of heart. The country has bouts of political volatility, a checkered human rights record and is suspected of being home to Islamic State militants.

And there is the 14.80-percent yield on Egypt's 10-year bonds, another trait illustrating the point that EGPT is not your run-of-the-mill single-country investment. On the other hand, there are signs of improvement in the Egyptian economy.

Reasons To Consider EGPT

“Egypt's first interest rate cut since exchange rate liberalization has been made possible by an improvement in macroeconomic stability, underpinned by more orthodox policy settings under the country's International Monetary Fund program,” said Fitch Ratings. “These factors were reflected in our revision of the outlook on Egypt's 'B' sovereign rating to Positive last month.”

EGPT, which turned 8 years old earlier this month, holds 28 stocks. As is the case with many emerging markets single-country ETFs, the Egypt fund is heavily allocated to financial services stocks. That sector represents 23.3 percent of the fund's weight. Real estate and materials stocks combine for almost 40 percent of EGPT's roster.

The Central Bank of Egypt cut its overnight deposit and lending rates by 100 basis points on Feb. 15, to 17.75 percent and 18.75 percent, respectively, according to Fitch.

“Its main operation and discount rates were also cut by 100bps, to 18.25 percent. The CBE had increased rates by 700bps since devaluing the Egyptian pound in November 2016.”

Know What You Own

It is prosaic advice, but ETF investors should always know what they own. In the case of EGPT, investors, perhaps unknowingly, are embracing a small-cap fund. The weighted average market value of the fund's holdings is just $1.6 billion: small-cap territory. Over 90 percent of EGPT's components are classified as mid- or small-cap stocks.